Monday, April 29, 2013

I’m a big fan of mentoring in business, and have been at different times on both the contributing and receiving end of the process. These days, I seem to often hear from entrepreneurs who are struggling to find a mentor, or complaining about their lack of effectiveness. Like any other relationship, it takes work on both sides to make mentoring work.

Most entrepreneurs view a mentor as someone older and more experienced who takes the time to personally give guidance, advice, and takes an emotional investment in your success. They don’t think about this process requiring an investment on their part, both in nurturing the relationship, and really listening, without being defensive, to advice given.

Brian Tracy, in “Earn What You’re Really Worth,” solidifies my ideas on how mentoring, as well as other personal development activities, can quickly increase anyone’s value and income in business. Here are some key points on how to find and utilize the right mentor, which I have adapted specifically for entrepreneurs:

Set clear objectives for yourself in your business growth. Decide exactly what it is you need mentoring on before you start thinking of the ideal person to work with. A successful financial executive probably isn’t a good mentor for building and executing a great marketing strategy. If you don’t have an objective, you won’t know when you arrive.

Work, study, and practice continually to solidify the guidance. The very best mentors are the most interested in helping someone who is willing to learn and grow quickly. That doesn’t mean you should accept any guidance blindly, but it does mean no time making excuses, and an honest effort to understand and implement action items.

Don’t ask for too much time or make a nuisance of yourself. Remember, the best mentors are busy people, and they may be opposed to someone trying to take up a lot of their time. The best approach is to ask for small focused blocks of time, maybe just ten minutes, in private, and be prepared with real issues to discuss.

When you meet with a mentor, you should lead the discussion. Your mentor should not be driving your business, or expected to provide critical feedback on actions taken or missed.It’s most effective if the entrepreneur proposes the agenda and drives for specific insights, but never forgets to press the mentor for broader or related implications.

Remember the difference between a mentor, a friend, and a coach. Expect a mentor to tell you what you need to hear, not like a friend who may tell you what you want to hear. A business coach is focused on helping you with generic skills, whereas a mentor’s aim is to teach you based on specific situations. The same person can’t be all of these.

On a regular basis, send a note to communicate progress and current tasks. There is nothing that makes a potential mentor more open to helping you than your making it clear that you are following through, and the help is doing you some good. This is also a good way to hand out and follow up on assignments to your mentor.

Keep the relationship positive and productive. If a mentor proves to be unresponsive or on a different wavelength, bow out of the relationship immediately. Be aware that mentors are usually in a business position that can hurt you as well as help you, so don’t waste their time or antagonize them.

When you consciously and deliberately seek out a mentor, you must look for someone who genuinely cares about you as a person and who really wants you to be successful in your venture or your career. That emotional involvement and genuine concern for you are the keys to real mentor contributions.

Some people will say that they need to make all their own mistakes, in order to learn from them. Yet there is plenty of evidence that the fastest way to business success is by piggybacking on the counsel of men and women who have already spent years learning how to succeed. If you can’t make a mentor relationship work, I worry about the rest of your business as well.

Sunday, April 28, 2013

You have probably heard plenty of times that being an entrepreneur is a risky business, and investors talk all the time about reducing the risk. Yet everyone seems to have their own view of key risk drivers for startups, and I’m no exception. I don’t agree, for example, that the first priority is to avoid startups with a high attrition rate, like trendy restaurants and entertainment.

Here is my own priority list of key risk drivers that every entrepreneur and every investor should evaluate and minimize in starting a business:

Team experience and depth risk. Here I’m talking about both the experience and track record of the founders in starting a business, as well as their experience and knowledge of the business domain. Like most professionals, when I get a business plan, I flip first to the founders section to see if it is a balanced team who has been there and done that.

Market and opportunity risk. There is always less risk with a well-defined problem in a large and growing market. All the people in China is a large and growing market, but all the people with cancer is much more well-defined. It’s hard to make money in a shrinking market, or with a solution that is “nice to have” versus painfully needed.

Competitive risk. Think seriously about the number and clout of your competitors. Having none is a red flag (may mean no market), but having more than a couple of large ones may mean this is a crowded space. Even in an open space, you need intellectual property, like patents, to keep potential competitors from overrunning you.

Financial risk. Very few businesses can be started without money. You as the founder will be expected to put your own “skin in the game.” The business plan should be realistic about how much cash will be required to break-even, and how big the return will be for investors in the first five-year timeframe.

Market entry strategy risk. The selection of an inappropriate pricing, marketing, or distribution strategy is a large potential risk. For example, many new social websites proclaim that they will offer a free service, and live on ad revenues (not likely in the first year without a huge marketing investment).

Political and economic risk. Sometimes founders are just in the wrong place at the wrong time. Recessions are a tough time to sell luxury goods. Under-developed countries may have a strong need for your product, but are often unstable and dangerous. Four specifics include tax rates, tariffs, expropriation of assets, and repatriation of profits.

Technology risk. New technologies, especially those characterized as “paradigm shifts” or “disruptive” may have long and costly acceptance cycles, or may run into unpredictable performance or manufacturing problems. Medical technologies have costly legal testing requirements, approval processes, and insurance validation.

Businesses with high attrition rate risk. Certain business sectors have historical high failure rates and are routinely avoided by investors and many founders. These include food service, retail, consulting, work at home, and telemarketing. On the Internet, I would add new social networking sites, and new matchmaking sites.

Operational risk. Some businesses require huge support or administrative infrastructures. For example, vehicle fuel improvements require service stations and maintenance shops nationwide, before they are viable. Even small operations can have breakdowns of specialized equipment and complex support processes.

Environmental risk. A nuclear reactor built on an earthquake fault line is a huge risk. Evaluate your business and location for sensitivity to floods, hurricanes, and catastrophic pollution problems, like an oil spill in the Gulf of Mexico.

The biggest risk of all is starting a company, any company, for the wrong reasons. See my related article “10 Perspective Checks on Your Startup Aspirations” for a good start in this category. If your startup is clean on both of these lists, you will most likely build a successful business, get the funding you need, and have fun at the same time. What more could a budding entrepreneur want?

Monday, April 22, 2013

I’ve noticed that some entrepreneurs seem to have no trouble attracting investors, while others with a great business plan struggle with it. The reality is that angel investors are humans, and personal traits often make or break the relationship, even before the investment is considered.

On the top line, angel investors look to invest in entrepreneurs that have an almost unwavering passion and sense of urgency. In the business, this is commonly called “fire in the belly.” If you don’t have it, you probably won’t succeed, even with funding.

Of course, this has to be in concert with a variety of visible characteristics that indicate that you as the entrepreneur have the attitude and practical skills to make it happen. Here are some key ones they look for:

Talks and writes well. Can concisely explain the unique, compelling value of the proposed venture in written terms and in oral presentations (elevator pitch), recognizing that some investors rely more on one than the other. Listens before answering questions.

Networked and connected. Successful entrepreneurs already have a visible network of trusted suppliers, potential customers, partners, and even investors. These are critical to any venture. A successful track record with previous investors is a home run.

Full disclosure attitude. Clearly willing to provide details of weaknesses as well as strengths of the proposed venture, and the challenges ahead You must be willing to welcome the participation of the angel investor in the company, at least at the advisory level.

Values intellectual property. Convincingly presents a patent, trademark, or other “secret sauce” that can create equity value, not just current cash flow for the owners. This has value now, and is critical for maximum value in a merger or acquisition.

Not in a heated rush. Calm and self-assured, rather than desperate. Can show milestones achieved, as well as planned, which indicate rational expectations. Allows sufficient time to find capital, including due diligence time for investors.

Realist. The best entrepreneurs recognize and accept things as they are, and react accordingly. They are quick to change their direction when they see that change will improve their prospects for achieving their goals.

Domain experience and expertise. Investors realize that passion is no substitute for knowledge and experience, and every business is more complex that it might look on the surface. They will pay a premium for someone who has been there and done that.

At the stage during which the angel is normally investing, the entrepreneur may be all the angel has to go by to decide whether the deal is worth pursuing. The technology or product may be at an embryonic stage. There may not be any customers to talk to in order to evaluate the market need.

The investor, in order to eventually be successful, has to spot not only winning technologies but winning people, and all investors have a slightly different view of what a winner looks like. So, of course, they try to guess the internal traits, like honesty, dedication, vision, intelligence, and leadership based on external traits listed above.

If you think you want to be your own boss and run your own business, look in the mirror to see if you have the right traits to be an entrepreneur in your domain of interest. Better yet, ask a real friend, who won’t just tell you what you want to hear. We can’t change you, but you can change yourself, if the current pain level or the future reward is high enough.

Thursday, April 18, 2013

Before you, as an entrepreneur, can hope to successfully start a new business, you need to set some goals and milestones to lead the way. It’s easy to talk in the abstract about all the possible applications for a new technology, but you don’t have a viable business plan until you have specific targets on what you will produce, when, and how.

Yet many people avoid these specifics out of fear of the unknown, or set some totally unreachable goals. I’m a believer in having a healthy disregard for the impossible, but it does help to have a structured path to get there. Only when you have conceptualized your idea into realistic goals can you move on to prepare an implementation plan.

Yet even the best entrepreneurs are not sure why they succeed or fail. As a result, they blame failures on the wrong things, and are surprised when they can’t reproduce successes. Heidi Grant Halvorson, Ph.D., in her book “Succeed: How We Can Reach Our Goals,” gives six great recommendations around goal setting in general, and I’ve adapted them to the startup environment as follows:

Formalize your goals. Setting a goal requires the conceptualization of an idea into structured thought, and formalizing that thought into one or more goals. For a startup, that formalization is a business plan. It’s hard to know when you have arrived, if you have never figured out and declared where you are going.

It’s about execution. Most of the time, startup founders know what needs to be done to reach a goal, but just don’t manage to actually do it. Focusing on execution is essential for success, whether it be for business or personal goals. Action trumps thinking, especially when the future in uncertain.

Seize the moment. Given how busy most entrepreneurs are, and how many goals they are pursuing at once, it’s not surprising that most routinely miss opportunities to act on a goal, because they simply fail to notice the opportunity. Startups who move swiftly get traction with customers and investors.

Know what to do. Once you’ve seized the moment, you’ve got to figure out exactly what you’re going to do with it. This is why experience in your business domain, and experience running a startup are so valuable to investors. Everyone can learn, but it takes time, and goals are jeopardized by time in this rapidly moving world.

Put your shields up. Goals require protection – distractions, temptations, and competing goals can steal your attention and your energy, and sap your motivation. Entrepreneurs need to focus on creating value for their customers and investors, and be sure to spend time on critical business issues, rather than the current crisis.

Know how you are doing. Achieving a goal also requires careful monitoring. If you don’t know how well you are doing, you can’t adjust your behavior or your strategies accordingly. Check your progress frequently against milestones and financial projections of the business plan.

When you create goals in business, no matter how unrealistic they might seem, you are deciding that they are possible and that you are going to find a path to meeting them. To make this happen, you need all the motivation you can muster, and all the guidance from experts, to achieve success in these goals, and achieve your long-term dreams.

It probably means stretching beyond your comfort zone, by developing creativity if you are mainly practical, and mastering the art of execution and organization if you are mainly creative. Also, you need to really believe that you can achieve your goal, even if it’s taking longer than you planned. Don’t concentrate so hard on reaching your goal that you lose sight of why you set it in the first place. Enjoy the ride.

Monday, April 15, 2013

After the idea, it’s all about execution. In fact, it’s not clear that even the idea is all that important. Most investors tell me that an A entrepreneur with a B idea is much more fundable than a B entrepreneur with an A idea. It’s great to be a visionary, inventor, thinker, or a dreamer, but none of these matter in the business world if you are not also a do-er.

According to Professor Sean Wise, who claims to have worked with more than 15,000 entrepreneurs (including many with the popular TV shows Shark Tank and Dragon’s Den), no matter how great the idea and the opportunity, in the end it is only the execution that creates change and generates wealth.

Never fails to be an evangelist. This entrepreneur gets out there and actively looks for people who can help make an idea into a business, including potential customers, suppliers, employees, investors, friends and peers. No secret discussions about the great idea, or paranoia that someone else will steal it.

Willing to listen, and will address skeptical views. Good executors always ask the hard questions, and don’t let people get away with saying just what they want to hear. They dig deep, and keep asking questions until they understand what you don’t like or won’t work, and even offer do some homework before getting back with a better answer.

Proactively sets metrics and track goals. There are more things in a business to keep track of than any single human being can accomplish without a serious project management mindset. Good implementers find a way to translate long-term goals into daily action items, and make sure everyone is “singing from the same song book.”

Tie rewards to performance results. Effective business people work hard to align everyone in the organization toward key metrics. They don’t hire friends, or just pay people for showing up and looking busy. A properly designed rewards structure is the most powerful tool for mobilizing the team to meet business success objectives.

Tie organizational structure to strategy. The entrepreneur who can execute quickly identifies strategic value chain activities and can quickly communicate who’s in charge of each one, so these key activities don’t fall between the cracks. This doesn’t require that all traditional titles be filled, to impress investors, or due to a lack of imagination.

Willing to question assumptions and adapt. Most successful startups make several major pivots early in their business lives. The chances of your first business plan being correct are very low, so great entrepreneurs take ownership of their plan and make it a living document. Others commit to stay the blind course, and will probably fail.

Entrepreneur a personal role model. Not only does an entrepreneur breathe life into the company, but they also instill their values, passion, and work ethic. If they can’t make and keep commitments, neither will the company. Investors recognize difficult personalities and large egos as high risk for effective execution.

Of course, entrepreneur evaluation, as well as opportunity evaluation, is a highly subjective process. We all have biases that can trick us into making bad decisions on people, as well as ideas. Thus the best entrepreneurs, and the best investors, spend more time trying to find information that refutes their beliefs, rather than more data which might support a bias.

Certainly, successful implementation requires an understanding of the "big picture," but the devil is in the details. Yet leading for execution is definitely not about micro-managing people or doing it all yourself. It is about “owning” the process, leading others by example, with no excuses.

We have all heard lots of entrepreneurs proclaiming that their idea is the “best you will ever see!” But every investor and advisor I know has to think a long time before they can talk about the best execution they have ever seen. How many do you know?

Sunday, April 14, 2013

These days I see a surge of new startups as the economy seems to be recovering. If you are not starting one yourself, the next best thing is joining one as a partner, or as an early employee. It takes much the same preparation to make you the best entrepreneur, or the best job candidate. Of course experience is the best teacher, but you need to get the job to get the experience.

According to Ford R. Myers, a noted career coach, and author of “Get The Job You Want, Even When No One’s Hiring,” many job seekers and career changers make the mistake of halting all their efforts as summer approaches, believing that nobody will be hiring until early fall. He and I believe that these next few months are the perfect time for starting a new career.

Here are some tips from both his perspective and mine to stave off the coming summer “brain drain” and focus on the next step of employment, or starting a whole new career as an entrepreneur:

Create and control your Internet image. Whether it's LinkedIn, YouTube, or Facebook, you need an online presence. No online presence may brand you as “old school,” and not startup material. Carefully monitor the "personal brand" you're building on the Internet to keep it positive.

Perform an internal career audit. Now is a perfect time to take an honest look at your career -- where you've been, where you are today, and where you'd like to go. Identify new goals based on your own definition of career success and then take action.

Invest in career coaching. A qualified career coach can help you get totally clear on your objectives, differentiate you from the competition, market you effectively, get the offer, and negotiate the best compensation. Don’t assume it’s a luxury you can’t afford.

Actively work the network. Spring and Summer are the best times of the year to make new connections and find new startups, with outdoor activities and sports. Contrary to popular belief, business networking is not all done at investor receptions and conferences.

Follow-up with existing connections. Make new connections through your network, and always follow up with people you've already met. I’ve never met an executive or professional yet who didn’t enjoy being asked to share his expertise and views, and most will then remember you as someone who really cares.

Update your career "tool kit." Most job seekers still use only their resume as the cornerstone of their search. But there are many other items you should have in your "career tool kit" – good online profiles, accomplishment stories, positioning statement, contact list, professional references, letters of recommendation, and more.

Tune your business fashion sense. Fashion trends in startups are more relaxed and modern than you may see in large enterprises. It may be time to update your apparel to prevent the impression that you are stuck in the past and may have a difficult time adjusting to the startup world. It also will boost your own confidence level as well.

Volunteer or seek internships. There are many volunteer opportunities available during this time of year. This is a good way to get practical job experience, help people, and to meet other professionals who may be able to recommend you.

It is better to give than to receive. The fastest and most effective strategy for getting help is to offer help to others. Ask the people in your network who they might like an introduction to or if there is any way that you can be of assistance to them.

Become an opportunity magnet. Always think and speak positively, and never say anything negative. This will help you to become an opportunity magnet -- poised to attract, interview and "hire" your next employer.

The most important thing is to get out there and work the territory. If you adopt a defeatist attitude or wait for the job to find you, startup founders and peers will quickly see this, and you will be defeated. Startups are hard work for everyone, so enthusiasm, confidence, and a can-do attitude are essential to success. The harder you work at it, the luckier you will get.

Thursday, April 11, 2013

One of the toughest challenges of an entrepreneur in building a startup is the fact that there are so many things that you don’t know how to do, or don’t like to do. Things like raising money, building a business plan, or hiring and firing people. These aren’t fun, especially for a visionary. That’s when the curse of procrastination steps in.

The result is that certain things just never seem to get done. Jan Yager, in her book, “Work Less, Do More” talks about procrastination as a primary obstacle to efficient time management. She describes how you can grow so busy doing everything but what you should be doing, that you’re unaware that you’re failing to address what’s really fundamental to your success.

I haven’t met an entrepreneur yet who can honestly say they haven’t felt this challenge. Here are some techniques I espouse from Jan and others for conquering procrastination:

Plan your daily activities in advance. Make whatever it is you’re avoiding the very first task you do on a given day. Don’t start the day by checking e-mail, surfing the Internet, or reading the newspaper. Get a priority task done first every day, then take a break or do some low priority work that you enjoy more.

Set up a personal reward system. Pick a reward that will be a real motivator, something you truly want but have been denying for yourself. For example, as soon as you complete your financial projections, you can call your business partner to skip out for that round of golf he keeps mentioning.

Try creative procrastination. If you are finding your top priority to be too daunting, try tackling the second or third most important items on your to-do list. You will accomplish all your day’s priorities, but in a different order. That’s better than substituting a trip to the doughnut cart.

Arrange for gaps in your schedule. Build space into your schedule so you actually have some free time that will still permit you to get the priority project done without the tendency to put yourself down or engage in the self-criticism that too often accompanies procrastination.

Face the truth head-on. Take a few minutes to contemplate why you are delaying something. What does the postponement provide? What will it take to get you to act now? Write down the real deadline. Maybe it’s time to hire an expert, or assign the task to someone else on the team. Move the ball.

Define a period without distractions. Make a resolution to turn off the phones for the first hour of a day, or close the door to your office to discourage interruptions. Do not let anyone distract you from your priority tasks during these periods.

A closely related malady to procrastination is the well-known “Parkinson’s Law” – all work will expand to fill the time allotted. When you add procrastination, people tend to start things too late, and then miss the deadline, no matter how far in the future it is set.

Psychologists assert that procrastinators actually sabotage themselves. They put obstacles in their own path. They actually choose paths that hurt their performance, and avoid success in life. It represents a profound problem of self-regulation.

If you are a chronic procrastinator, or your business partner is one, becoming a successful entrepreneur is unlikely unless things change. You can change yourself, using the techniques described above, perhaps combined with cognitive behavioral therapy. Believe me, it’s worth it for your personal well being, as well as that of the business. Start now.

Tuesday, April 9, 2013

Even though it has been a long haul, it’s nice to see some optimism surfacing in 2013. Earlier this year, a new study “2013 Business Outlook Survey: A New Reality Of Cautious Optimism” was published by EKS&H. It shows a return to cautious optimism despite growth lower than expected in 2012, and much improved perspective from the record-high pessimism of the last few years.

According to earlier studies from Forbes Insights, many entrepreneurs not only feel the lessons learned during the past few years have helped them survive, but the recession also exposed flaws in their business strategies that were previously not apparent, and they could fix. Here are some financial planning areas of emphasis derived from multiple studies:

Better cash flow controls. Obviously, falling income over the past years put additional pressure on small business cash flow. Some companies turned to cutbacks over boosting financial reserves. Others focused on reducing overhead and expenses, but they needed a balanced strategy, along with new lines of credit and financing.

More focus on strategic planning. Small business owners now recognize the importance of planning amid the new economic environment and want to spend more time doing it. Only 44% indicated they had a strategy in place during the recession, or to guide growth during the coming recovery period. More work needed.

Increased business role in US economic recovery. Small businesses now believe they have played a key role in the U.S. economic recovery, but in spite of, rather than assisted by, support from the federal government. Still, they are fighting for action, particularly for even higher Small Business Administration (SBA) loan limits.

Increase operating efficiencies. A majority of small business leaders intend to be more aggressive in 2013 by implementing a range of actions to advance their businesses. Respondents cited a greater focus on cost cutting and efficiency as the number two step to achieving growth in 2013, only slightly behind increasing sales.

Add new revenue streams, and more aggressive marketing. At the same time, 71% plan to spend more on digital marketing in 2013, and pursuing new revenue streams is seen as a top priority for transforming bottom line profits. Another approach is to diversify and broaden the product lines and services.

Grab market share from competitors. A large majority of respondents acknowledged that the old way of doing business will no longer work and that they need to find new ways to take advantage of market opportunities. Many are planning to be more aggressive in grabbing market share from competitors.

These initiatives, in concert with current findings, support economists’ forecast that the U.S. economy is transitioning to a self-sustaining economic expansion in 2013-2014 that will not be derailed by the sequester, Europe’s sovereign debt problems, or the still looming U.S. fiscal cliff.

The NFIB Index of Small Business Optimism increased 1.9 points in February, to 90.8. While a nice improvement over the last several reports, the Index still remains on par with the 2008 average and below earlier troughs. The direction of February’s change is positive, but still not indicative of a real surge in confidence among small-business owners.

My take on all this is that entrepreneurs see some light at the end of the tunnel, and the light is no longer a freight train heading straight at them. We always learn more when times are tough, and we should come away with more strength and determination, as well as real results. Soak up the optimism, do some real financial planning, and push the limits on all business fronts.

Marty Zwilling

Disclosure: This blog entry sponsored by Visa Business and I received compensation for my time from Visa for sharing my views in this post, but the views expressed here are solely mine, not Visa's. Visit http://facebook.com/visasmallbiz to take a look at the reinvented Facebook Page: Well Sourced by Visa Business.

The Page serves as a space where small business owners can access educational resources, read success stories from other business owners, engage with peers, and find tips to help businesses run more efficiently.

Every month, the Page will introduce a new theme that will focus on a topic important to a small business owner's success. For additional tips and advice, and information about Visa's small business solutions, follow @VisaSmallBiz and visit http://visa.com/business.

Monday, April 8, 2013

One of the big advantages of being an entrepreneur and starting your company from scratch is that you get to set the culture, which is much easier than changing the culture of an existing business. The challenge is how to do it, and how to do it right. Why not learn what you can from companies like Apple, who are leading the way with great growth and a great culture?

Jim Stengel, in “Grow: How Ideals Power Growth and Profit” chronicles a ten-year study of the world’s fifty best businesses, including Apple, and concludes that those who centered their businesses on a culture of improving people’s lives had a growth rate triple that of competitors in their categories.

Here are ten culture building principles, adapted for startups from this study, that I believe have the same potential for tripling the growth and survival potential of your entrepreneurial efforts:

Communicate your dream and operationalize it. Mission statements tend to be narrow, business oriented statements such as “Be the leader in customer satisfaction.” Your dream and your company culture needs to be outward focused with a higher good, extending beyond the company’s financial interests.

Be clear about what you stand for, inside and outside your company. Your personal priorities, values, and principles set the culture. The best way to be clear about them is to regularly engage team members, customers, and suppliers. People follow what you do, not what you say.

Design your organization for what it needs to win. This includes the specific work your startup must do, the capabilities you need to build for a competitive advantage, and the career path for team members to bring this to life. “Traditional” marketing, sales, and product management organizations often lead to mediocrity.

Get your team right and do it quickly. For startups, this means knowing where you need help and where you need helpers, and hiring carefully. For help, hire people who are smarter than you in the domain they know, while helpers give you arms and legs, but need you to dictate the tasks and make all the decisions. Quickly handle hiring mistakes.

Champion innovation of all kinds. You must visibly champion a portfolio approach to innovation, emanating from dreams, not desperation. The portfolio should be much more than just product improvements, and should include better business models, customer service improvements, as well as continuous process improvements.

Set your standards very high. You tell people every day what meets your standards when you agree or disagree with recommendations from your team. If you believe in your team, you set high standards and stick to them. A good team will step up to the challenge, and your customers will notice and respond to the culture of excellence.

Train all the time. This is simply a mind-set shift. Every interaction every day is a training event, and you can capitalize on it or not. Training is coaching, rather than criticizing, to improve the outcome next time. Training all the time is a hallmark of great leaders and great companies.

Do a few symbolic things to create excitement about what is important. Focus on one or two symbolic events a year, major actions that will be meaningful to your team and other stakeholders, and make them fun as well as directional. Pick your heroes carefully, both customers and team members.

Think like a winner, act like a winner. Customers can sense how motivated a business’s people are just from seeing the product and how it’s presented to them. Customers want to buy into a winner, so make sure your people never apologize for price or quality, and never back away from an opportunity to delight a customer.

Live your desired legacy. If you don’t know your ultimate goal, you will never get there. If you team doesn’t know the ultimate goal of your business, they can’t get it there either. Be like Steve Jobs, who lived a legacy and left a legacy at Apple, of radical or even magical products and experiences. He did it in one of the world’s largest companies.

The right business culture doesn’t require a cult atmosphere, but it does require a disdain for concepts like conventional wisdom and status quo. It does have to be built around ideals, employee permission to be creative, and something other than just making profit. How many of these principles do you practice in your startup?

Sunday, April 7, 2013

The Hype Cycle was a concept put forward by Gartner, Inc. back in 1995 meant to apply to technology product evolution and acceptance. As I was reading about it a while back, it occurred to me that the concept relates directly to how investors see startup opportunities and potential success as well, at least those with technology in their offerings.

For those of you unfamiliar with the concept, the Gartner Hype Cycle characterizes the over-enthusiasm or "hype" and subsequent disappointment that typically occurs with the introduction of new technologies. Hype curves then show how and when technologies move beyond the hype, offer practical benefits and become widely accepted. A hype cycle in Gartner's interpretation always comprises five phases:

Technology trigger. The first phase of a hype cycle is the technology trigger or breakthrough, product launch or other event that generates significant press and interest. This is the “truly disruptive technology” that startups often claim.

Peak of inflated expectations. In the next phase, a frenzy of publicity typically generates over-enthusiasm and unrealistic expectations. There may be some successful applications and startups using the technology, but there are typically more failures.

Trough of disillusionment. Technologies and related startups enter the trough of disillusionment because they fail to meet expectations and quickly become unfashionable. Consequently, the press usually abandons the topic.

Slope of enlightenment. Although the press may have stopped covering the technology, some businesses continue through the slope of enlightenment and experiment to understand the benefits and practical application of the technology.

Plateau of productivity. A technology reaches the plateau of productivity as the benefits of it become widely demonstrated and accepted. The technology becomes increasingly stable and evolves in second and third generations. Startups can now truly define a problem, and position their solution for rapid growth. Investors love this stage.

For the latest info, Gartner recently released their Hype Cycle Special Report for 2012, detailing some of the biggest trends in technology this year. This report evaluates the maturity of more than 1,900 technologies and trends in 92 areas. New this year is big data, the Internet of Things, in-memory computing and strategic business capabilities. It’s definitely worth a look.

According to this latest report, HTML5, 3D printing, gamification, social analytics, and augmented reality are now at the peak of inflated expectations. The trough of disillusionment includes NFC for mobile payments, cloud computing, gesture control, virtual worlds, and more. Media tablets, biometric authentication, and speech recognition are on the slope of enlightenment, and predictive analytics is now in the plateau of productivity. Others say Software Defined Networking (SDN) is still on the rise.

There have been numerous criticisms of the hype cycle, one of which is that it is not a cycle, and that all technologies don’t really have the same outcome. Another criticism is that the shape of the line has not altered or accelerated in ten years, even though all the evidence suggests that the half-life of new technologies is getting shorter, and the number of competing technologies is increasing.

So, of course you have the option of ignoring hype cycle predictions, and pushing forward with your latest technology startup. Just don’t be surprised if you get investor pushback while early in the cycle, and be prepared with counter arguments. Great startups know the hype, then set out to beat it.

Saturday, April 6, 2013

What happened to Generation X? They are generally defined as anyone born between 1965 and 1980, sandwiched between 80 million Baby Boomers and 78 million Gen-Y (Millennials). Gen-X has just 46 million members, but they continue to lead the way and set the standards in the startup world.

Gen-X is the group that will bridge the two larger generations of Boomers and Gen-Y. I guess the bridge isn’t as exciting as what has happened on one side or what might happen on the other, so they are often referred to as the “forgotten” generation, or the lost child demographic.

What are the legacies that Gen-Y inherited from Gen-X? Aren't Gen-X creations like YouTube and MySpace largely responsible for Gen-Y narcissism? Didn't punk rock begat Rock Band? Gordinier says in his book "We've created all these great websites that now Millennials waste their lives on."

In fact, one could argue that Gen-X actually created the Internet. The Internet then gave each person the ability to voice their own ideas and concerns, leading to new levels of group collaboration. Here are some additional characteristics often associated with Gen-X:

Individualistic. Gen-X came of age in an era of two-income families, rising divorce rates and a faltering economy. Because they were the first “latch-key” children, Gen-X is independent, resourceful and self-sufficient. In the workplace, Gen-X values real responsibility and freedom.

Technologically adept. The shift from a manufacturing economy to a service economy occurred during their watch. They were the first generation to grow up with PDAs, cellphones, e-mail, laptops, Blackberrys, and technology woven into their lives.

Flexible. Many Gen-X’ers lived through tough economic times in the 1980s and saw their workaholic parents lose hard-earned positions. Thus, Gen-X is less committed to one employer. They adapt well to change and are tolerant of alternative lifestyles.

Value work/life balance. Unlike previous generations, members of Gen-X work to live rather than live to work. They appreciate fun in the workplace and espouse a work hard/play hard mentality. Gen-X managers now sometimes incorporate games and humor into team work activities.

Gen-X is rife with entrepreneurs. In fact, they will likely make or break our country’s ability to transition to the new social Internet society. They have drive and independence. And they have a lot they can teach both the boomers and Gen-Y.

In fact, they currently make up 42% of the American workforce, compared to 32% Boomers (because some have already retired) and 26% Gen-Y (the rest are still at home or in school).

This generation felt the freedom to go into business for themselves, such as the many dot-com companies that emerged during the 90s. They were not as concerned with security, often returning to their parents' home after experiencing college and work for the first time.

For at least the next few years, Gen-X will be the major facilitators of change. They are now or will be soon running your company. Indeed, in these times we really can’t afford to forget this particular group. Show your respect today.

Friday, April 5, 2013

The most successful entrepreneurs and executives I have seen are savvy business people first, and experts in their field second. This may seem counter-intuitive to technologists, especially in an era when technology seems to be driving the world. Yet the sad truth is that a technology not focused on a real problem is not a business, and will probably fail in the marketplace.

Examples that come to mind include satellite phones, the Segway PT vehicle, hydrogen fueled auto engines, and many more. The issue in these cases was usually not the technology per se, but the bigger business picture of marketable prices, ease of use, and support infrastructures.

It still amazes me how many entrepreneurs can fathom the physics of gyroscopes, but fail to comprehend the big picture requirements for positive cash flow and profit. Kevin Cope, in his book “Seeing the Big Picture”, does a great job of outlining the basics of business acumen for executives, and helped me assimilate some practical ideas on building the essential elements for entrepreneurs:

Reserve time daily to research the market, as well as technology. Learning is a never-ending requirement for every entrepreneur. At best, all they teach you in school is how to learn. In these days of rapid change, most experts believe that the facts college students learn as a sophomore are obsolete before they exit their senior year.

Build relationships with key experts in your business domain. Talk regularly with peers and advisors who have been there before you. Your focus should be on listening and asking questions, rather than defensively arguing that your situation is somehow different from all the others.

Be proactive in contributing business ideas and follow through. Talk is cheap when it comes to innovative ideas in business. You don’t really understand a new idea, until you try to write it down and succinctly communicate it to peers and critics. Waiting to follow through until you are backed in a corner is usually too little, too late.

Network in the industry as well as outside. The best entrepreneurs have the best “little black book” of expert contacts. Through personal outreach, as well as industry organizations, they are constantly on the lookout for people smarter and more experienced in their domain. Networking requires sharing as well as taking.

Even the best have mentors they really use. A mentor is someone who will tell you what you need to hear, while friends and associates often tell you what you want to hear.Of course, it’s good to have both, but don’t confuse the two. Above all, be accountable to yourself in your efforts to keep the big picture in perspective.

Understand the business, then add value. The more business acumen you accumulate, the more likely you will be to bring real innovation and survive the deadly challenges. Ultimately, every business decision is a quest for maximum return on investment (ROI), utilizing cash, technology, and human resources.

You don’t have to have an MBA to understand that even the most complex multinational businesses are made up of five key drivers – cash, profit, assets, growth, and people. While each driver is unique, it is also completely dependent on all the other drivers. Experts in technology might thus only understand twenty percent of what they need to succeed in business.

In my view, the big picture starts with a continuous effort to better understand the basic business elements, as well the technology and people elements. The next step is using all the elements of business intelligence available today to sort through and prioritize the flood of information and evidence of continual change in the market all around us.

The best entrepreneurs never lose sight of the big picture, and they never stop learning until they die. Unfortunately, it too often works the other way around.

Tuesday, April 2, 2013

Lack of confidence in your self, your product, and your startup is a surefire recipe for disaster. At the other extreme, too much confidence or arrogance can kill you just as fast. It’s always painful when a startup fails, but as a mentor to founders, I would hope that you can learn from these failings and not stumble on the same issues. I’ve written about these before, but since I see them so often, I thought it might be worth reiterating:

“Business plans are for dummies.” Some startups think business plans are only for investors. In reality, you should do a business plan primarily for yourself, as it forces you to think through all the elements. If it’s not written down, you can’t measure it, and thus you can’t manage it. Also written plans are much more effective communication to your employees, lawyers, accountants, and other key players in your rollout.

“If we build it, they will come.” The hot term these days is “viral marketing”, meaning we won’t do any marketing, but our product is so great that everyone will know about us anyway by word of mouth and through Internet social networks. In most cases, viral marketing only begins to work after you prime the pump with several million in real marketing over a couple of years.

“We have no competitors.” VCs and angel investors hear this one all the time. The investor view is that if you can’t find any competitors, either you are not being honest, or you haven’t looked, or there isn’t any market for your product. Your funding request will likely go into the circular file.

“More features than anyone.” Just because you included all the features of Facebook, Twitter, Pinterest, and LinkedIn in your new social networking product, doesn’t mean everyone will love it. In fact, quite the opposite usually happens, due to complexity and work to switch. Investors like laser focus on a market-need causing real pain.

“Microsoft is too big/slow to be a threat.” Usually the reason the big companies are no threat is that the market is too small. Competing with IBM, Microsoft, and other large companies is a very difficult task. Entrepreneurs who utter this line are kidding themselves. They may think it's bravado, but investors think it's stupidity.

“We have the first-mover advantage.” That’s probably the soft way of saying, we don’t have a patent or any “secret sauce” for a competitive advantage. Unfortunately, a startup with no brand name and no intellectual property is a sitting duck for the big slow company, as soon as they see you gaining a bit of traction. Sleeping giants do wake up.

“No need to risk my own funds.” This is usually seen as the difference between involved and committed. Investors expect the founder and other principals to have “skin in the game,” over and above “sweat equity.” If you and your friends are trying to play Donald Trump, don’t expect other mere mortals to carry the risk load for you.

“We’re funded, now we can relax.” Quite the opposite is really true. Now the real work starts to build a sustainable business. Now you have to manage to budgets and timelines, and avoid the temptation to splurge a bit on office space or too many new employees.

“It’s the market, stupid.” It’s great to have a passion about a favorite new toy you invented, but just because you love it doesn’t mean the whole world will love it. Another variation on this theme is the person who creates a “solution” from technology, and then makes up a “problem” that it will solve. There is no substitute for understanding the market, and sizing the opportunity, before you climb out on a limb.

“Me, myself, and I.” I recently watched a promising startup I know wither and die for lack of funds because the founder refused to consider stepping aside as CEO in favor of a more experienced candidate, as a condition of a $1M VC investment. I reminded him that he could easily “kick himself up to Chairman”, but he wanted it all, and let ego take precedence over good business sense.

You probably think these are so obvious that they are clichés. I wish that were true, but I still see them happening every day. The most successful startup founders are never too busy to listen to the market, listen to their advisors, stifle their ego, and enjoy the ride. It’s a lot more fun than the alternative.

Monday, April 1, 2013

Most aspiring entrepreneurs believe their initial idea and inspiration requires the most important creative thinking. Experienced entrepreneurs will tell you that the initial idea is the easy part, and it’s the later implementation, and the competitive business marketing that are the real creative challenges.

There is a tough balance here to achieve, since a large portion of starting and running a business requires analytical, logical thinking. In fact, our education and training to logically associate related concepts reduces our ability to add the creative side, even though we were all born without that bias. Maybe that’s why “thinking outside the box” is so rare.

While looking for guidance on how to be more creative in growing a business, I came across Michael Michalko’s book, “Creative Thinkering,” which clearly applies to business as well as personal environments. With his insights, I offer the following recommendations on how to nurture and build your creative business capabilities:

Look for familiar patterns in unrelated subjects. Due to learned habits and routines, new ideas default to be similar to old ones. Creative thinkers get results by combining dissimilar subjects, like investors and competitors. I find that startups looking for funding often never even think of asking strategic partners, rather than just venture capitalists.

Change the way you look at things, and the things you look at change. Stereotyped notions block clear vision and crowd out imagination. Sometimes it’s helpful to imagine contradictory approaches, or working with opposites. Many businesses have found that raising the price of a product to give it status can win more customers than a price war.

Think the unthinkable. We all need ways to unstructure our imaginations to explore the outer limits of alternatives, so that we can go beyond the typical solutions. In business, this may be as simple as replacing a product line that is still profitable, or a recent startup making a takeover bid for a large company. Creative people at Facebook are likely working on this one right now.

Intention is the seed of creative thinking. Intention has a way of bringing to our awareness those things that our brains deem important. One way to prime for creativity is to generate an awareness of what you want to accomplish. If you study the Amazon 1-click patent long enough, you’ll likely find something of your own worth patenting.

Change the way you speak, and you change the way you think. Many entrepreneurs focus on deficiencies, and phrase their thoughts and ideas with negatives, such as no, never, and don’t. Make a conscious decision to become a positive-thinking person by creating positive speaking patterns. Ten customer referrals is better than “no complaints.”

You become what you pretend to be. Attitudes influence behavior, but behavior also influences attitudes. Reality has often been shown to conform to beliefs, whether they be positive or negative. In business on the Internet today, it’s easier than ever to pretend to be a large and mature company, and successful startups don’t have to pretend long.

Brainstorming, ideation, thinking outside the box, disruption, creative thinking – whatever you want to call the process of developing successful new business approaches – is something that must explore every day in your business. You have to let go of things that are holding you back, and take chances in business, especially after that first great idea.

You cannot will a new idea. But you can train your imagination, like a muscle with regular exercise, to conceptually blend dissimilar concepts from different contexts, leading to original ideas and insights. How long has it been since you have conceived and implemented a really creative idea in your business?